Njord Wind

Don't Be Fooled - Short Selling Restrictions Do Work

Wait a minute - your premise is essentially "I thought the market declines on Monday and Tuesday were more 'orderly' than those of last week and therefore the short ban is 'working'" ("orderly" and "working subject to one's own definition). Sounds more than a little tenuous. I'm also extremely skeptical of the idea that there is a way that markets "should" behave.

Remind me again how short sellers cause solvent companies to go BK? Did short sellers cause LEH to lose billions of dollars? Don't be stupid, these companies got themselves into trouble.

While it might look good in your textbook, there are large differences between a short position and a synthetic short position made via options.

What do you expect Chanos and Kass to do? Sit by and accept it? The SEC is legislating their business models out of existence - you'd better believe they're going to protest it.

Naked shorting has always been banned, should be banned, and the ban should be enforced. I'd also be fine with them bringing back the uptick rule. But this heavy handed ban was brought down so people could think the SEC was "in control", only to later discover the thing was so hastily implemented and crudely constructed that the SEC was clearly as out of it as ever. It's caused ill-concieved havoc in the stock loan, ETF and options world. That said, I would fear its expiration, because we are indeed in a manipulated market at the moment, and look out below when the ban comes off.